China’s Ban On Public Spending On Luxury Goods And Services

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In the lead up to this October’s once a decade leadership change in China, growing public resentment of corruption has led to increasing scrutiny of extravagant spending by government officials in China. As a result, new measures were recently introduced to curb public spending on luxury goods and services. The following is a curated list of articles covering the potential impact this recent ban will have on China’s luxury sector.

China will bar government agencies from spending public money on luxury goods and lavish receptions as it combats corruption and burnishes its image ahead of a Communist Party leadership handover this year. Read full story at Bloomberg.

Tough times may lie ahead for luxury-mad Chinese officials, as Beijing announced its latest edict earlier this week: a complete ban of government splurges on luxury goods with public funds, set to take effect on October 1. Read the full story at Jing Daily.

BEIJING — The Chinese central government on Monday promulgated a new regulation designed to reduce administrative costs for government and public institutions.

The regulation explicitly prohibits government agencies from purchasing luxury items, goods or commodities above certain standards, as well as defines a frugal working style for the country’s civil servants. Read the full story at China Daily.

It’s not hard to see why luxury brands have pinned their hopes to Asia’s rising giant-China’s luxury consumption will grow 18% annually between 2010 and 2015, McKinsey said last year. Foreign luxury brands have been “rushing” in, says Deutsche Bank, citing rapidly growing store networks moving beyond the top tier cities. Read the full story at MarketWatch.

Hard times have fallen on Chinese bureaucrats. Already, they have been told to cut down on perks like restaurant meals, cars and expensive liquor. Now, their bosses say they must stop spending public money on all luxury items. Read the full article at WSJ.

HANGZHOU - An eastern Chinese city has banned serving luxury foods and liquors during official receptions in an effort to trim excessive public spending, local authorities said.

According to a regulation issued by the Wenzhou city government in late June, delicacies including shark fins, abalones and wild ginsengs were prohibited from appearing on such occasions, said Lin Zhanxiao, a director at the city’s discipline inspection commission. Read the full article at China Daily

China has a unique relationship between its politics and certain high-end industries. Bloomberg reporters Vinicy Chan and Crystal Chui suggest that anti-graft measures have dampened the luxury market to some extent: Read the full article at China Digital Times.

What’s a “naked official” in China? The phrase got so hot in the Chinese blogosphere that government censors banned it as a search term—but, no, a “naked official” has nothing to do with porn. It means a crooked functionary who’s sent his family and his assets abroad—assets that people assume were misappropriated largely from public funds. He appears “naked,” but looks deceive. Read the full article at Daily Beast.